The next step

If you are the owner of a family business, it is easy to get drawn into dealing with day-to-day matters that are urgent but not of real importance to the long-term survival of the business. Ultimately, nothing is more important than a solid succession plan. Here are seven tips on how to put together a plan that works for you and the next generation.

Start with the end in mind

The first thing to be clear on is: would you rather pass the business on to your children or have a clean exit at some point in the future and let your children follow their own path? This sounds simple, but there is a lot of emotion involved as often the business is “your baby,” particularly if you built it from nothing. Owners of family businesses often can’t bear the thought of selling as their own personal identity is so closely tied to their business.
 

Plan ahead

This may sound obvious, but it is amazing how many family-owned businesses do not put a succession plan together until it is too late. Sometimes the next generation has already followed another career path as they didn’t know that taking over the business one day was an option.
 

Communicate your plans

Open communication regarding your future plans and taking into account what your children want is the only way to put together a long-term plan that has any chance of working. It also allows you to identify opportunities for learning that can help with your choice of course studies in higher education and your choice of jobs taken for relevant work experience.
 

Treat family members fairly

Being fair means that you only employ family members to perform jobs that you believe they are capable of and that you pay them the going rate for that job. I have seen family members that are paid far in excess of what anyone else would be paid to do the same job. I have also seen family members who are underpaid for the job they are performing. Indeed, in my own experience I was paid a sales manager’s salary when I was already the general manager of not one, but two car dealerships. This led to some tension with my father and put me under unnecessary financial strain.
 

Ownership experience

Don’t miss the opportunity to gradually introduce the next generation to the people who support your business such as your banker and/or key customers. This way they will get a feel for what is involved in being a business owner, and it also gives the message that you plan on having continuity of ownership for many years to come. This can be a comfort to your valued customers.
 

Formal structure

In the same way that you should have regular board meetings (even if you are a small business) to discuss the strategic direction of your business, it is vital that you have a forum in which you can discuss family ownership. This can be a simple family meeting with a specific issue to address, or it can be a series of meetings that are held over time to monitor your succession planning.
 

Work experience

It is invaluable for the next generation to come into the business with enthusiasm, ideas, and new and improved ways of doing things. If this is to happen, however, they need to have some prior, relevant work experience. Working outside the family business for a few years can deliver huge long-term benefits.

Richard J. Bryan shares how he's applied creative strategies to articulate a crystal-clear vision, hire the right people, forge a dynamic team and build a profitable business. Richard is a leadership speaker, author and business coach. www.richardjbryan.com.